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Compound Interest PS

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Intern
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Joined: 12 Apr 2009
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Compound Interest PS [#permalink]

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New post 12 May 2009, 16:39
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Tim invested $1000 at 10% annual interest, compounded annually, and Laura invested $2000 at 5% annual interest, compounded annually. The total amount of interest earned on Tim's investment in the first 2 years is how much greater than the interested earned by Laura's investment in the first 2 years?

a. 5
b. 15
c. 50
d. 100
e. 105

from gmat free prep software on mba.com - practice test 1
Senior Manager
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Joined: 08 Jan 2009
Posts: 324
Re: Compound Interest PS [#permalink]

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New post 12 May 2009, 18:56
Tim - 1000 R = 10%
Interest
Ist yr = 100
2nd yr = 110

Laura - 2000 R = 5%

Interest :
Ist yr = 100
2nd yr = 100 + 5 = 105

110 - 105 = 5
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Re: Compound Interest PS [#permalink]

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New post 22 Jul 2009, 00:20
Pretty straight forward calculations here, I read somewhere that GMAT doesnt test the advanced topic in compound interest. ( Probably it was Princeton review, Crack the GMAT).
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Re: Compound Interest PS [#permalink]

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New post 23 Jul 2009, 04:14
meesawoosa wrote:
Tim invested $1000 at 10% annual interest, compounded annually, and Laura invested $2000 at 5% annual interest, compounded annually. The total amount of interest earned on Tim's investment in the first 2 years is how much greater than the interested earned by Laura's investment in the first 2 years?

a. 5
b. 15
c. 50
d. 100
e. 105

from gmat free prep software on mba.com - practice test 1

Tim earning.
1st Year 100+110=210
Laura
1st Year 100+105=205
So, the difference is 5, A
Re: Compound Interest PS   [#permalink] 23 Jul 2009, 04:14
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